MNCs in the News-2019-11-01

China

At a news conference, Chinese Vice Minister Wang Shouwen stated, “China will eliminate all restrictions on foreign investments not included” on its negative lists and stressed it would “‘neither explicitly nor implicitly’ force foreign investors and companies to transfer technologies.” Wang added that China would “move faster to open up the financial industry’…eliminating all restrictions on the scope of business for foreign banks, securities companies, and fund managers.” On top of this, he noted planned favorable steps relating to the new energy vehicles sector (“China to Ease Foreign Investment Curbs, Won’t Force Tech Transfers-Vice Minister,” Reuters, October 29, 2019, https://www.reuters.com/article/us-china-economy-foreign-capital-idUSKBN...)

One goals behind the United States (US)’ trade war with China is to get China to improve its protection of intellectual property rights (IPR). The US has been debating other techniques besides tariffs to do this. One method is to blacklist Chinese companies that repeatedly steal American intellectual property such that they lose the opportunity to conduct business in the US. The mechanism that would be used is to place them on the US Department of Commerce’s Entity List (Heather Long, “Trump Administration Considers Blacklisting Chinese Companies that Repeatedly Steal U.S. Intellectual Property,” The Washington Post, October 26, 2019, https://www.washingtonpost.com/business/2019/10/26/trump-administration-...)

At a recent seminar for Chinese contractors organized by the Chinese Embassy and Malaysia Construction Industry Development Board, Chinese Ambassador to Malaysia Bai Tian stressed that “Chinese contractors operating in Malaysia must play by local rules and develop in a ‘sustainable’ way. They must “‘adhere to the principles of mutual benefit and win-win.’” Malaysia’s representative at the event stressed the need for cooperation as well as the need for Chinese companies to be aware of all legal requirements (Tashny Sukumaran, “Chinese Contractors in Malaysia Must Play by Local Rules, Develop Sustainably: Ambassador,” South China Morning Post, October 29, 2019, https://www.scmp.com/print/week-asia/economics/article/3035407/chinese-c...)

Laos is the home of a USD $6.7 billion high-speed railway (HSR) project. Many have raised concerns about the project in Laos given the lack of transparency and failure to consult civil society groups. Moreover, this and other Belt and Road Initiative (BRI) projects in Laos involve serious social and environmental implications. The Laotian government, though, will push forward with these projects given the country’s land-locked status and potential for the projects to reduce greatly the cost of shipping goods (John Reed and Kathrin Hille, “Laos’s Belt and Road Project Sparks Questions over China Ambitions,” Financial Times, October 29, 2019)

Japan

Japan’s Finance Ministry is working to provide more details about new restrictions on overseas investors amid concerns over the new rules’ ambiguities. Specifically, the Ministry will group Japan’s publicly traded companies into three groups (e.g., weapons makers or those never needing review) with different requirements for foreign investors. It stressed the new rules are not intended to close the door for investors. While several investors welcomed the move, some voiced concerns the new restrictions might hinder dialogue between companies and shareholders (Hisao Kodachi, “Japan to list core companies subject to foreign investment review,” Nikkei Asian Review, October 26, 2019, https://asia.nikkei.com/Economy/Japan-to-list-core-companies-subject-to-...)

Japanese automaker Toyota, along with US car company General Motors Co. and Fiat Chrysler Automobiles NV, have opted to side with the Donald Trump administration in a legal battle with the state of California over automobile emission rules. Toyota’s decision breaks with another Japanese manufacturer, Honda Motors Co., which previously agreed to meet Californian stringent standards. The Trump administration proposed to loosen federal regulations on greenhouse gas emissions, prompting a lawsuit by California to block the administration’s move to undermine its authority (“Automakers including Toyota side with Trump in California emissions standards fight,” The Japan Times, October 29, 2019, https://www.japantimes.co.jp/news/2019/10/29/business/economy-business/a...)

South Korea

Samsung Electronics and Samsung BioLogics executives could face prison terms of up to four years on charges of destroying evidence related to allegations of accounting fraud. South Korean prosecutors accused Samsung BioLogics of inflating its value by changing the method for calculating its Samsung Bioepis, a joint venture with US company Biogen Inc, stake. This adjustment resulted in Samsung BioLogics reporting a profit. Prosecutors believe the core purpose of this move was to enhance Samsung heir Lee Jae-young’s position at the conglomerate (“Prosecutors demand jail terms for Samsung execs in accounting fraud case,” The Korean Herald, October 28, 2019, http://www.koreaherald.com/view.php?ud=20191028000892)

A survey of Korean companies in China by various Korean industrial associations and think tanks revealed that more than half of respondents have suffered adverse effects from the US-China trade war. This figure compares to only 33 percent in the third quarter of 2018 while those saying there were not affected fell from 62 to 47 percent. Effects flow from the slowdown of the US economy, hindrances on exports to the US, and adverse effects on the global economy (Jung Min-Hee, “More than Half of South Korean Firms in China Complaining about China Trade Disputes,” BusinessKorea, October 28, 2019, http://www.businesskorea.co.kr/news/articleView.html?idxno=37414)